Who's Taking on Yahoo?

The New Showdown on the Web

精華簡文

In Taiwanese cyberspace a myriad of fledgling community websites are challenging the dominant position of big Internet portals like Yahoo. Can Yahoo Taiwan keep its grip on the island's Internet users?

Views

The New Showdown on the Web

In the afternoon of October 11, Yahoo Taiwan held its largest-ever marketing event in Taiwan on the 7th floor of the glitzy Taipei department store New York New York. Wearing T-shirts in Yahoo's corporate color, purple, almost 100 Yahoo employees wooed and schmoozed about 800 marketing executives, hoping to secure part of their advertisement budgets – the portal's lifeblood.

Why does Yahoo feel the need to be so proactive, given that it already is Taiwan's largest portal? Yahoo Taiwan registers nearly half as many site visits per month as Taiwan's population and holds a 70-percent share of the online advertisement market.

"They used to make money without doing anything, but now they have many competitors," says one Internet industry insider. Clearly, there are many signs that more and more people are challenging the monopoly position Yahoo has in Taiwanese cyberspace.

Last year Taiwan's largest real estate agency Sinyi Realty teamed up with Chinatrust Real Estate, Pacific Rehouse and three other property agents to found the website Rakuya.com.tw. The real estate agencies transferred the NT$10 million that each company had spent annually for advertisements on Yahoo to Rakuya. Their main motivation was to free themselves from the stranglehold of Yahoo, which had taken advantage of its strong position to raise advertisement fees every year.

In operation a little more than a year, Rakuya already attracts as many visitors as Sinyi Realty used to get on its official website via Yahoo.

Similarly, Lion Travel Service and three other travel agencies, which used to spend some NT$200 million combined per year on ads on the Yahoo home page, had enough of Yahoo's pricing policy and decided to take their money elsewhere. "They have a monopoly position in Taiwan's online industry, and their attitude is accordingly arrogant," says Lion Travel vice president Chen Hsien-hsiang.

Facebook's Overnight Success Threatens Yahoo

And there is an even more stunning phenomenon. Social networking website Facebook launched its Chinese-language interface only in July this year. But thanks to the highly popular online game "Happy Farm," membership has exploded from a few hundred thousand at the beginning of this year to almost 5 million now. Website traffic figures for September show that Facebook's reach rate (the number of unique visitors to a website in a given month as a proportion of the total number of active Internet users during the same period) is the second highest in Taiwan, with 57 percent. Facebook's instant success puts Yahoo under a lot of pressure.

Freda Shao, managing director of wwwins Consulting Taipei, observes that online advertising has begun to change. Advertisers used to be in the habit of buying banner ads on portal websites, but "in community media, ads are not that important -- you have to get into the community and build a brand," she explains.

A number of large companies have already caught on to this trend. Taiwan's largest retail company President Chain Store Corp., for instance, runs a fan page on Facebook. Minute Maid, a Coca-Cola brand, posts ads on Facebook's Happy Farm. Since advertisers are curious about these new emerging advertisement avenues, Facebook's advertising agent ihub Media from Singapore has founded a three-person subsidiary in Taiwan to solicit Taiwanese business.

So, can the once almighty Yahoo still keep a grip on the entire cyber landscape?

During the past decade new websites seeking to throw down the gauntlet at mammoth Yahoo have mushroomed. And the number of these daring challengers has crescendoed in just the past few years.

Specialty Site versus All-round Megasite

The first reason is that Taiwan's cyber environment has gradually matured over the past ten years or so, leading to the emergence of "vertical portals" (or "vortals"), which resemble specialty stores with a clear focus on a specific area and niche audience. In contrast, Yahoo resembles a megastore that caters to almost any interest. But now that interactive web applications commonly referred to as Web 2.0 are widely in use, these vertical portals have gained popularity, because they facilitate information sharing and user interaction in web-based communities.

In 2008 community websites already accounted for one fourth of Taiwan's top 100 websites, while portals like Yahoo accounted only for 10 percent.

The Taiwanese social networking site Wretch.cc, which was bought up by Yahoo in 2007, is also struggling to fend off increased competition from an ever greater number of rival sites.

ARO (access rating online) figures by website rating agency InsightXplorer Limited show that as early as two years ago, social networking sites other than Wretch.cc already surpassed Wretch.cc in terms of reach rate and duration per visit.

While Yahoo developed the market for online advertising, it also created new business opportunities for newcomer websites.

In the past three years, web-based advertising has grown at rates above 10 percent per year, reaching NT$6.89 billion this year. Statistics by the Taipei Internet Advertising and Media Association (IAMA) show that while vortals get only about one quarter of the ad volume that portals get, their advertisement business is growing at an annual rate of 17 percent, compared to just 11 percent for web portals.

At the same time, advertisers have become more Internet savvy. They no longer splash out their entire online ad budget on megasites such as MSN and Yahoo, but are willing to try out vortals, which promise targeted marketing.

Unlike Yahoo, these niche portals cannot boast 10.7 billion total page views per month, but they are doing their best to find new business opportunities and try to differentiate from other websites. The key to their success is development of Web 2.0 applications that cater to specific communities.

In May this year Lion Travel Service launched its free TravelPlus+ magazine, which is also downloadable as an e-magazine on the company's official website. The website, which sees some 200,000 visitors per day, offers blogs and Web TV, where users can post their own travel videos and photos, by far exceeding the functions of a traditional travel agency website. "We are not just a platform, but a website with specialized travel content. We are very different from portals like Yahoo which provide an entry point for information on all spheres of life," says Chen in explaining the website's business model.

Niche Sites Go Deep

Yet they wield considerable influence among their respective audiences. In the evening of November 12, FashionGuide, the largest Chinese-language cosmetics vortal, held an awards ceremony for cosmetic products that had won top user ratings on their website. Representatives from more than 100 cosmetics brands including SK-II and Dior made it a point to attend the party at Amazing Hall in Taipei.

FashionGuide has around 60 employees and is entirely focused on cosmetics and beauty products. On the website users can answer questionnaires to share their own experiences with a certain product. But FashionGuide has also linked cyberspace with the real world by recruiting more than 7,000 netizens as its market research team. Based on the number of votes a product gets, it may be awarded a FashionGuide endorsement label. Statistics show that upon endorsement, product sales rise by an average of 14 percent.

Photo album and blog services site Pixnet is another website that successfully followed a "Go Deep" strategy in a single field. Last year the Taiwan High Speed Rail Corporation, which operates the island's bullet train, posted ads on Pixnet's blogging platform. And Pixnet found bloggers who were willing to contribute stories about their own train rides.

In comparison with the high exposure of advertisements on heavily frequented portals like Yahoo, Pixnet offers more in-depth advertisement services. As Pixnet founder and COO Tseng Huang-lin emphasizes, niche sites do more than just scratch the surface. "What we do here is discuss things in depth, since bloggers like to discuss things and delve deeply into topics," Tseng notes.

Four years ago when online auction website eBay founded Kijiji Taiwan, which offers free classified ad services, it attracted many small- and medium-sized enterprises that could not afford a big advertising budget.

For SMEs, large-scale advertisement campaigns are out of the question, observes Kijiji Taiwan president Celine Chiang. "We are a platform for SMEs. A single banner ad costs NT$200,000 to NT$300,000. That's a game for large corporations," she says.

Classified ads posted on Kijiji are free of charge. The website makes money with value-added services – that is, anything that goes beyond a standard ad. Changing the background color, for instance, costs NT$200. Every month some 500,000 to 600,000 ads are posted on Kijiji.

In the ever-changing world of the Internet, no single site is able to cover all imaginable user needs and interests. Constant competition and cooperation set the pace.

Challenged and pursued by specialists, Yahoo, the decathlete of the Internet, is busily taking stock of its strength in every single field. It might not be difficult for the specialists to defeat Yahoo in one discipline, but beating it in all ten does not look like an easy feat.

Yet as new challengers keep cropping up in cyberspace and the Goliaths try to defend their dominant positions, the web-based world will only become richer.